Andrew Carnegie and the foundations of contemporary entrepreneurial philanthropy
Charles Harvey, Mairi Maclean, Jillian Gordon and Eleanor Shaw
This paper focuses upon the relationship between the business and philanthropic endeavours
of world-making entrepreneurs; asking why, how and to what ends these individuals seek to
extend their reach in society beyond business. We present an original model of
entrepreneurial philanthropy which demonstrates how investment in philanthropic projects
can yield positive returns in cultural, social and symbolic capital, which in turn may lead to
growth in economic capital. The model is applied to interpret and make sense of the career of
Andrew Carnegie, whose story, far from reducing to one of making a fortune then giving it
away, is revealed as more complex and more unified. His philanthropy raised his stock within
the field of power, helping convert surplus funds into social networks, high social standing
and intellectual currency, enabling him to engage in world making on a grand scale.
Keywords: capital theory, Carnegie, entrepreneurship, entrepreneurial philanthropy, social
networks, field of power
Published as: Harvey, C., Maclean, M., Gordon, J. and Shaw, E. (2011) ‘Andrew Carnegie
and the Foundations of Contemporary Entrepreneurial Philanthropy’, Business History, 53(3),
424-448.
Introduction
This article has a dual purpose. The first is to present a more complete and intellectually
satisfying explanation than presently exists for the involvement of super-wealthy
entrepreneurs in large-scale philanthropic ventures. Entrepreneurs who become major
philanthropists are referred to here as entrepreneurial philanthropists, and include amongst
their number Bill Gates, Conrad and Barron Hilton, Andrew Mellon, John D Rockefeller and
Henry Wellcome. These individuals and others like them are distinguished both by a fierce
drive to accumulate personal fortunes and by the desire to deploy a significant part of their
wealth in pursuit of philanthropic ventures over which they can exercise control (Bishop &
Green, 2008; Schervish, Coutsoukis & Lewis, 2005). Entrepreneurial philanthropists do not
see themselves as simply disposing of surplus funds, but rather as actively investing their
resources (money, know-how, time, social connections, reputation and prestige) in projects
that promise high social rates of return. They are, in other words, powerful social actors
1
engaged in the business of world making (Bourdieu, 1987), which we conceive, following
Creed, Scully and Austin (2002: 475), as ‘the embedded ways in which agents relate to and
shape systems of meaning and mobilize collective action to change social arrangements.’ Our
second purpose is to demonstrate through analysis of the career, writings and impact of
Andrew Carnegie (1835-1919), the progenitor of modern-day entrepreneurial philanthropy,
how these individuals secure substantial personal returns from their philanthropic investments
(Ostrower, 1995; 2002). We argue that philanthropic activities serve to boost the cultural,
social and symbolic capital of entrepreneurs and increase their effectiveness as multipositional agents within the field of power, the integrative domain that brings together elite
actors from different walks of life, including business, politics, public administration, media
and the law (Bourdieu, 1996; Maclean, Harvey & Chia, 2010; Moore, 1979; Useem, 1979). It
is through coalitions, alliances and networks forged within the field of power that
entrepreneurs are able to influence societal decision-making processes, resource flows,
institutional changes, and public opinion (Burt, 2000; Geletkanycz & Hambrick, 1997; Zald
& Lounsbury, 2010). In assuming prominence at the pinnacle of society, legitimized and
accepted in part through their status as philanthropists, leading entrepreneurs greatly increase
their capacity to deliver desired outcomes within the realms of business and philanthropy
(Marinetto, 1999).
In taking Andrew Carnegie as our exemplar, we aim to look afresh at his career and
the continuing importance of his ideas and example. Carnegie was by no means the first
wealthy industrialist to donate a large part of his fortune to philanthropic causes; but he was
pioneering in his articulation of the ethics of entrepreneurial philanthropy and in putting
theory into practice on a large scale (Curti, 1961; Wren, 1983): in terms of size of fortune,
expressed in real terms, and the proportion of wealth disposed of charitably, Carnegie has few
rivals (see Table 1). Invariably, the methods by which he came to accumulate his fortune and
2
the reasons for its philanthropic disposal have been the subject of considerable academic
interest. His rise from humble beginnings, the son of a Scottish handloom weaver who
migrated to the United States in 1848 when Andrew was aged 12, settling close to relatives in
Allegheny City near Pittsburgh, to owner of a mighty steel company, sold to J.P. Morgan in
1901 and reconstructed as US Steel, has been charted in detail (Hendrick, 1932; Wall, 1970;
Livesay, 1975; Nasaw, 2006). There is likewise an extensive literature on his philanthropic
activities from the early 1870s onwards (Lester, 1941; Van Slyck, 1995; Burlingame, 2004).
What has not been done, however, is to consider how business and philanthropy were
conjoined within his world. This we aim to do.
The article divides into four main sections. We first consider how entrepreneurship
and philanthropy are related, and propose an original model of entrepreneurial philanthropy
based on capital theory. The next section details Carnegie’s rise to power, his accumulation
of a massive fortune, and his philanthropic projects, principles and practices. There then
follows an analysis of the ways in which Carnegie accumulated and exploited non-standard
forms of capital. We demonstrate how philanthropy repaid him in cultural, social and
symbolic capital, strengthening his business and enabling him to engage in world making on
an ever larger scale. In the final section, we draw together the threads of our argument,
consider the implications for theory, reflect on the enduring importance of Carnegie’s
philosophy and philanthropic practices, and assess the limitations of the study and
potentialities for future research.
Entrepreneurship and philanthropy
We define entrepreneurial philanthropy as the pursuit by entrepreneurs on a not-for-profit
basis of big social objectives through active investment of their economic, cultural, social
and symbolic resources. The emphasis here is on the involvement and active identification of
3
the entrepreneurial self in pursuit of opportunities for social betterment; the roles played by
individuals varying by commitment and available resources, including those of mastermind,
investor, partner and champion (Acs & Phillips, 2002). As such, our definition of
entrepreneurial philanthropy resonates with the various labels used in recent years to describe
entrepreneurs who bring to philanthropy more than just money: venture philanthropy (Letts,
Ryan & Grossman, 1997), strategic philanthropy (Sandfort, 2008), creative philanthropy
(Anheier & Leat, 2006), enterprising philanthropy (Dees, 2008) and philanthrocapitalism
(Bishop & Green, 2008). However, where we disagree with these sources is with respect to
their emphasis on novelty; the idea that entrepreneurial philanthropy has emerged only in
recent years in response to the challenges posed by globalization and persistent inequalities in
incomes, health and economic opportunities. In our view, there exists a paradigm for
entrepreneurial philanthropy that has been in continuous use since the late nineteenth century.
We see few essential differences between the philanthropic practices of Andrew Carnegie and
contemporaries like Bill Gates and Chris Cooper-Hohn (Bishop & Green, 2008: 1-87). In
each case, there is recognition of the injustices stemming from structural inequalities, a desire
for others to benefit from wealth creation, and active investment of economic, cultural, social
and symbolic resources in ambitious schemes for social improvement.
A necessary but not sufficient condition for becoming an entrepreneurial
philanthropist is to have amassed a fortune through one’s own endeavours. Typically, in the
entrepreneurial life course, the largest fortunes are made by those entrepreneurs who become
dominant actors within a defined economic field – Carnegie in steel, Rockefeller in oil,
Hilton in hotels and Gates in computer software are illustrative – before extending their social
reach and world-making ambitions. Dominant economic actors have abundant power, defined
as command over resources (Maclean, Harvey & Press, 2006). They have risen to
commanding positions within their industries typically through control of pivotal
4
technologies or know-how, having a superior business model, and growth through large-scale
mergers and acquisitions (Chandler, 1977: 415-500). By retaining control of their enterprises
as they grow, they are able to extract economic rents from broad swathes of the population.
The acquisition of property rights, which grant license to extract economic rents, thus
emerges as key to a generic understanding of how great personal fortunes are made (Keister,
2002: 55-106; Kuznets, 1955; Piketty & Saez, 2003). Acquiring a nexus of property rights
sufficient to become a dominant actor within an economic field is not a passive process, but
invariably requires victory in a succession of contests for control (Bourdieu, 1996; Jensen &
Ruback, 1983; O’Sullivan, 2000). Emerging victorious from such contests confers legitimacy
and reinforces the right of dominant actors to harvest economic rents (Lado, Boyd & Hanlon,
1997; Schoemaker, 1990; Tollison, 1982). Those who lose out in contests for control – for
example, when their business is sold to a more dominant player – may also benefit as a
proportion of future economic rents are pre-sold in order to secure the advantages of
domination (DeTienne, 2010). Entrepreneurial philanthropists, therefore, may be members of
the super-dominant business elite like Bill Gates, or an entrepreneur who has already cashedin, like his Microsoft co-founder Paul Allen.
In recognizing that power is fundamental to fortune making and philanthropy, and
that the two are inextricably linked, we take a vital step towards understanding the true nature
of entrepreneurial philanthropy, as a world-making process through which already successful
entrepreneurs use their power to accumulate more power, extend their social and political
influence, and increase their capacity to shape society according to their will. This definition
– which describes an accumulative rather than a distributive process – runs counter to the
view of entrepreneurs who become philanthropists as altruistic individuals who, having made
a lot of money, are now ‘giving back’ to society to ‘make a difference’ (Duncan, 2004: 2159)
to the lives of others less fortunate ‘as an expression of [their] sense of community with
5
others’ (Boulding, 1962: 62). Rather, our thinking is more aligned with those who conceive
large-scale philanthropy in terms of hyper-agency (Bishop & Green, 2008; Schervish et al.,
2005) and status distinctions within elite social groups (Ostrower, 1995). In our view, there
are no clear motivational or temporal demarcations between the entrepreneurial and
philanthropic lives of entrepreneurial philanthropists: the same individuals and the
organizations they create are constantly changing and forever becoming (Chia, 2002; Tsoukas
& Chia, 2002), and their dispositions are formed in specific contexts through everyday acts of
practical coping and interactions with other actors (Clarke & Holt, 2010; Ucbasaran,
Westhead & Wright, 2001). What distinguishes the most successful from the less successful
is their capacity to learn, acceptance of changeability, and mastery of the on-going processes
of industrial, organizational and personal transformation, which require them continuously to
seize opportunities, fixing incrementally upon possibilities rather than what is now (Cope,
2005; Harvey, 1979).
The model presented in Figure 1 is illustrative. In this, the entrepreneur is seen to
possess four types of capital: economic, cultural, social and symbolic (Anheier, Gerhards &
Romo, 1995; Bourdieu, 1986b; Harvey & Maclean, 2008; Terjesen & Elam, 2009).
Economic capital consists of financial assets, non-financial assets like patents, tangible assets
in the form of facilities, plant and equipment, and the systems, processes and organizational
routines that facilitate production, distribution and control. Cultural capital is shorthand for
the personal dispositions, knowledge, know-how, skills and capabilities of the entrepreneur,
business associates and key employees. Social capital exists in the form of connections,
networks, relationships and alliances that deliver market intelligence and provide access to
critical resources. Finally, symbolic capital, the signifiers that generate trust in partners,
financiers, regulators, customers, suppliers and employees, works silently but powerfully to
energise the business and create belief within markets (Harvey & Maclean, 2008; Maclean,
6
Harvey & Press, 2006). The arrows at the centre of Figure 1 suggest two things. The first is
transmutability: the conversion of one form of capital into others (Bourdieu, 1986b). As
priorities change, the free cash generated within a business from its stock of capital can be
used incrementally for future investment (Dierickx & Cool, 1989). The second is momentum.
When free cash generation is positive, a business has the opportunity through reinvestment to
enter into a self-reinforcing cycle of growth (Mueller, 1986). When free cash generation is
negative, the opposite situation prevails; the business withers and its asset structure decays.
From this perspective, the most successful entrepreneurs are those with the capabilities
needed to generate forward momentum and accumulate within their business significant
economic, cultural, social and symbolic capital (Barringer, Jones & Neubaum, 2005;
Finkelstein, Harvey & Lawton, 2007: 295-329), helping overcome the constraints to growth
identified by Penrose (1959).
[Insert Figure 1 Here]
Entrepreneurs who ultimately emerge as dominant economic actors, leaders in their
field, invariably have been on an entrepreneurial journey that has required them to embrace
the necessity of deploying and accumulating each of the four forms of capital identified in
Figure 1 (Finkelstein, Harvey & Lawton, 2007: 107-143). At the outset, having identified a
winning product or service – a strong value proposition – and a business model through
which this might be delivered, the challenge is to assemble the required economic, cultural,
social and symbolic resources. It is not possible to devise a compelling value proposition
without the market and technical knowledge that stems from cultural capital (Helfat &
Lieberman, 2002). Sufficient economic capital likewise is required to implement a
sustainable business model (Arthurs & Busenitz, 2006). Without adequate social capital, the
essential support of suppliers, partners and financiers will not be forthcoming (Baron &
Markman, 2003). If there is no symbolic capital, it will be near impossible to gain access to
7
networks or convince potential customers of the benefits of purchase (Zaheer, McEvily &
Perrone, 1998). The entrepreneur must therefore deploy and leverage the capital he or she
possesses to kick-start the business and stimulate an upward spiral of capital accumulation.
The deployment and rapid accumulation of social capital is crucial and dependent on the
abilities and performance of the entrepreneur (Casson, 1994; Castanias & Helfat, 2001;
Penrose, 1959). As momentum builds, fresh competitive challenges ensue: investment is
required in infrastructure to capture economies of scale and scope; further knowledge and
know-how must be acquired through investment in research and development or acquisition;
additional social capital is needed to exploit market opportunities and navigate external
environments; brand building and reputational enhancement likewise demand regular
investment (Barney, 1997; Helfat, 1997; Petraf & Bergen, 2003; Teece, Pisano & Shuen,
1997). Throughout all of this, competitive pressures lead to regular contests for corporate
control, restructuring and industrial concentration, simultaneously presenting new
opportunities and challenges to develop capabilities and win competitive advantage (Anand,
Capron & Mitchell, 2005; Barney, 1991; Capron & Pistre, 2002; Karim & Mitchell, 2000;
Vermeulen & Barkema, 2001).
The journeys to the top taken by those entrepreneurs who emerge as dominant
economic actors not only demand foresight and personal resilience, but also increasingly high
levels of cultural, social and symbolic capital (Maclean, Harvey & Chia, 2010). As
companies become larger and more dominant, they also become more conspicuous and open
to challenge from other powerful actors, such as politicians, regulators and consumer pressure
groups (Domhoff, 1979). Dominant economic actors must exercise leadership on behalf of
their industry as well as their own company. In doing so, they emerge as actors within the
field of power in which the big questions of the day are settled through dialogue, negotiation
and compromise between elite actors from different walks of life (Bourdieu, 1996; Domhoff,
8
2002; Maclean, Harvey & Chia, 2010; Useem, 1979). Within the field of power, dominant
economic actors engage dialectically through conversations, speeches and other
communications to shape opinions on matters of importance to their business (Smith, 2000);
they operate instrumentally to form associations, alliances and pressure groups to lobby
decision makers for agreed outcomes (Baumgartner et al., 2009); and they function
legislatively in consort with politicians, lawyers and officials to manage changes in the laws,
regulations and established conventions that impact on their industry (Domhoff, 1979). In
sum, entrepreneurs who rise to the top within their field, if they are to protect and enhance the
position of their business, must learn to extend their reach beyond business to make common
cause with other members of the elite (Clegg, Courpasson & Philips, 2006).
From this perspective, the field of power is the point of union between business and
philanthropy. To navigate within it, business leaders require considerable cultural, social and
symbolic capital, and the most successful actively seek opportunities to renew and expand
their capital base. This is done by a variety of means. Cultural capital is acquired by moving
in the right circles to gather intelligence from those in the know. Orchestrating and
participating in social gatherings, from dinner parties to invitations to premier cultural and
sporting events, are favored for this purpose (Baron & Markman, 2003; Giddens, 1984).
Social capital is acquired by extending network reach, and so business leaders often mutate
into multi-positional actors by accepting invitations to join the boards of educational,
governmental, cultural, sporting and philanthropic organizations (Burt, 2000; Geletkanycz &
Hambrick, 1997; Ostrower, 2002). Here, by making common cause, they become familiar
with other influential members of the social elite. Symbolic capital is acquired through
recognition and respect. To stand out from the crowd, to be a distinguished figure – revered
not reviled – it is necessary to transcend self interest and promote causes with apparent
selflessness (Suchman, 1995). Championing causes that attract the support of the public, by
9
giving voice and investing resources, is a source of distinction, often rewarded through State
honours and honorary degrees (Bourdieu, 1986a; 1996). Together, possession of high levels
of cultural, social and symbolic capital enables dominant economic actors to increase their
influence and power to determine the outcomes of societal events (Maclean, 2008).
Our understanding of entrepreneurial philanthropy, viewed through the lens of capital
theory, is modelled in Figure 2. This demonstrates that entrepreneurship (for-profit) and
philanthropy (not-for-profit), far from being separate and distinctive activities, are related
symbiotically one to another. Entrepreneurs invest economic capital in their philanthropic
activities, most often through the vehicle of a charitable foundation, alongside their cultural,
social and symbolic capital, which serve to increase the scale and effectiveness of their
philanthropic activities, as the leverage achieved by Bill Gates through association with
Warren Buffet illustrates (Bishop & Green, 2008: 1-5). The economic capital invested
philanthropically by definition yields no direct return to the entrepreneur. However,
potentially there are returns in the form of cultural, social and symbolic capital, which in turn
might yield an economic return. Philanthropy thus construed serves as a vehicle for capital
conversion, answering the question raised most succinctly by Boulding (1962, 60): what is
‘the motivation for genuinely unilateral transfers, that is, a quid for which there is no quo’?
The answer, we propose, in contradistinction to Boulding’s argument that philanthropy
represents a ‘pure gift’ motivated by altruism, is that successful entrepreneurs are drawn to
philanthropy as an unimpeachable source of the cultural, social and symbolic capital needed
to navigate effectively in the field of power. They seek out influential social circles in which
charitable giving and sitting on the boards of philanthropic foundations is an expectation, and
the wealthier you are the more you are expected to contribute (Ostrawer, 1995; 2002). Not all
entrepreneurs see the need to respond enthusiastically to the call; but for others, for whom
further accretions of conventional wealth are of near-zero marginal utility, there is a powerful
10
attraction to engaging in world making on a grand scale. The returns in cultural, social and
symbolic capital alone might justify such actions, but indirectly and somewhat paradoxically
philanthropy might also serve to boost the entrepreneur’s financial fortunes. We next turn to
put flesh on the theoretical bones through analysis of the career of Andrew Carnegie.
[Insert Figure 2 Here]
Carnegie, entrepreneurship and philanthropy
There is a wealth of sources, primary (his autobiography, books, articles, speeches and
business and personal papers) and secondary (biographies and thematic studies), on the life
and career of Andrew Carnegie. In what follows, we resist the tendency common in the
literature to judge Carnegie or question his integrity. This is not our purpose. In our view, his
actions and achievements are best understood in relation to his lifelong quest to be somebody
in the world, to make a big difference, and to be known for having made a big difference.
Carnegie, we assert, was both the author and ‘hero’ of his own unfolding story (Gabriel,
1995), forever looking ahead to the next chapter; actively seeking opportunity to engage in
the business of world making.
There are few tales of rags-to-riches to rival that of Carnegie. He began his working
life began as bobbin boy in a cotton mill in Allegheny City in 1848 aged 13 before joining the
Atlantic & Ohio Telegraph Company as a messenger boy. It was here that he first made his
mark, ingratiating himself with local businessmen and learning to decode telegraph messages
by ear (Carnegie, 2006a: 33-60). His social skills and technical prowess brought him to the
attention of Tom Scott, superintendent of the western division of the Pennsylvania Railroad,
and in 1852 he was appointed Scott’s personal clerk and telegraph operator (Laird, 2006: 1822). He was an employee of one the nation’s largest, most profitable and rapidly growing
enterprises, and stood out by virtue of his diligence and willingness to assume responsibility
11
for operational decisions. He became trusted by the Pennsylvania’s senior executives,
including company president J. Edgar Thomson, enjoyed regular increases in salary, and was
cut in as junior partner on insider money-making deals. In 1859, he was promoted to
superintendent of the western division of the railroad based in Pittsburgh (Carnegie, 2006a:
61-102; Nasaw, 2006: 54-65). As his range of business contacts multiplied, so too did his
commitment to business venturing outside the company in oil, bridge building and iron
manufacture. He resigned from the railroad in 1865 to pursue fresh opportunities as investor
and company promoter, focusing on railroads, bridges and related industries (Carnegie,
2006a: 103-132). He made money by drawing up prospectuses and selling stocks and bonds
in US ventures mainly in New York, his operational base from 1868, and London (Carnegie,
2006a: 133-157; Nasaw, 2006: 66-136; Wall, 1970: 212-231). His success provided the
wherewithal to enter the steel rail business, exploiting the potential for large-scale, low-cost
production promised by the invention of the Bessemer converter (Livesay, 2006; Misa,
1995). He and his partners invested heavily in a state-of-the-art works at Braddock near
Pittsburgh, which they named after Edgar Thomson. The new enterprise flourished from the
outset, with Carnegie as senior partner assuming the roles of strategist, decision taker,
figurehead, contract chaser and negotiator, while his junior partners based in Pittsburgh had
operational responsibility for the procurement, technical, manufacturing, commercial and
financial aspects of the business (Carnegie, 2006a: 158-171; Nasaw, 2006: 137-183) . A
combination of relentless organic growth, which secured economies of scale and drove down
costs, and major acquisitions – Frick Coke in 1881, the Homestead steel works in 1883, the
Duquesne steel works in 1890, Oliver iron mining in 1894, and the Rockefeller Mesabi iron
leases in 1896 – which achieved economies of scope, had raised the company to a position of
industrial dominance by the time it was sold to J.P. Morgan in 1901 for $480 million
(Chandler, 1977; Livesay, 2006; Misa, 1995).
12
At the epicentre of an upward spiral of business growth for over four decades,
Andrew Carnegie enjoyed virtually unbroken year-on-year increases in income and wealth.
Already, by 1865, the year he left the Pennsylvania railroad, where his annual salary was
$2,400, his income for the year was declared as $38,750. By 1868, he was earning $50,000 a
year and had a net worth of $400,000 (Nasaw, 2006: 105-114). His strategy, in pursuit of a
great fortune, was to invest his free cash in the Pittsburgh-based cluster of businesses he
controlled rather than diversifying his holdings. In maintaining control, he could insist that
the bulk of profits were reinvested to increase capacity and reduce unit costs (Livesay, 1977:
420-425; Nasaw, 2006: 511-523; Tedlow, 2003: 52-59). His net worth was computed at
$14.80 million in 1890; probably an underestimate, as typically the book value of his firms
was stated well below their market value (Wall, 1970: 320-330). This was confirmed on the
sale of Carnegie Steel when his share brought in $225.64 million in gold bonds yielding 5%
per annum (Nasaw, 2006: 567-592). This sum was the economic resource underpinning
Carnegie’s great period (1901-14) as entrepreneurial philanthropist and would-be world
maker.
His philanthropic journey, outlined in Table 1, had begun decades before. In 1868,
aged 33, he reflected that to ‘continue much longer overwhelmed by business cares and with
most of my thoughts wholly upon the way to make more money in the shortest time, must
degrade me beyond hope of permanent recovery’ (Nasaw, 2006: 113-114). Making his mark
in the world, even at this embryonic stage, was for Carnegie about more than making money.
A few years later, after entering the steel industry, he committed to philanthropy in earnest.
The church organ he presented to his former church in Allegheny in 1873 and the endowment
of swimming baths to his native town Dunfermline in 1874 were portents of things to come.
In paying for thousands of church organs, he was not inspired by Christian faith, but by his
belief in the civilizing power of music (Carnegie, 2006a: 240-241). Likewise, the public
13
libraries he donated to communities across the United States, Britain and British Empire,
beginning in Dunfermline in 1879, bore testimony to his conviction that libraries, in
promoting learning, could help others, however poor, to raise themselves up in the world
(Carnegie, 2006a: 44-51; 2006b: 20-22). His ideas may not have been new; but through the
organ and library programs, he raised the philanthropic bar by implementing systematic,
criteria-based grant-making on an unprecedented scale (Nasaw, 2006: 605-609). The model,
refined progressively on the basis of experience, was to guide applicants through a process
that ensured projects were properly scaled – organs to buildings and libraries to communities
– and sustainable. In the case of libraries, sustainability was assured not by making
endowments but by having local authorities accept responsibility for book stocks and running
costs as a condition of grant (Van Slyk, 1995).
Carnegie’s thoughts on enterprise and philanthropy, refined over the 1870s and 1880s
through experience of both worlds, were brought together in 1889 in his two-part essay
‘Wealth’ published in the North American Review, and re-printed many times since as The
Gospel of Wealth (Carnegie, 2006b: 1-30). In his view, the staggering inequalities of wealth
of the industrial age were explained as a consequence of human progress. Competition
between producers had led them to employ ever more productive technologies on an ever
larger scale, resulting in the concentration of production in the hands of the most competent
entrepreneurs. In the process, the population benefited from cheaper goods and rising living
standards; but a small number of individuals with a rare talent for organizing had grown
supremely rich (Carnegie, 2006b:63). This was bad not because the entrepreneurial class was
undeserving of reward, but because the scale of reward was excessive, productive of envy,
and threatening to the social compact between rich and poor, capital and labor. Successful
entrepreneurs, he reasoned, had the solution at hand: they should administer their wealth
responsibly for public benefit (Carnegie, 2006b: 65-67). Leaving fortunes to family members
14
was debilitating as it sapped the moral fibre of beneficiaries; while simply leaving bequests in
support of good causes was passive and potentially wasteful. What was needed was the active
management of wealth by those most capable of investing wisely on behalf of the
community, during their own lifetime. In Carnegie’s words (2006b: 10):
This, then, is held to be the duty of the man of Wealth: To set an example of
modest, unostentatious living, shunning display or extravagance; to provide
moderately for the legitimate wants of those dependent upon him; and, after doing
so, to consider all surplus revenues which come to him simply as trust funds,
which he is called upon to administer in the manner which, in his judgement, is
best calculated to produce the most beneficial results for the community – the man
of wealth thus becoming the mere trustee and agent for his poorer brethren,
bringing to their service his superior wisdom, experience, and ability to
administer, doing for them better than they would or could for themselves.
By thinking big and providing communities with universities, libraries, hospitals, parks,
cultural, recreational and sporting facilities, entrepreneurs might forsake almsgiving and
focus instead on creating opportunities for ‘those who will help themselves’ by providing ‘the
ladders upon which the aspiring can rise’ (Carnegie, 2006b: 11). Individualism might thus be
preserved, and the perils of socialism and anarchism avoided. Entrepreneurial philanthropy
was thus positioned as the best means of preserving a free, democratic society. Hence his
famous dictum: ‘The man who dies thus rich dies disgraced’ (Carnegie, 2006b: 12).
In matters philanthropic, Carnegie lived by his word. Five things stand out with
respect to his practice. First, and most obviously, Carnegie thought big and embraced world
making on a grand scale (see Table 1); distributing the vast majority of his fortune
15
philanthropically in his own lifetime. The cluster of museums he created in Pittsburgh in the
1890s, for example, forms a cultural hub of edificial proportion (Couvares, 1984). Second, he
invested more than money in his projects; he applied his cultural, social and symbolic capital
to bring projects to life and expand horizons. His contribution to the international peace
movement involved writing, public speaking, organizing high-profile events, pressing for
legislative changes and international agreements, and seeking the support of governments and
heads of state (Dubin, 1979). Third, he was discerning and principled in his selection of
philanthropic opportunities. Large numbers of unsolicited propositions were rejected; for
example, he repeatedly refused funding requests from top universities and colleges,
preferring instead to invest in schools for working-class children, black and white, such as
Booker T. Washington’s pioneering Tuskegee College and Carnegie Mellon University,
originally the Carnegie Institute of Technology (Nasaw, 2006: 599-601). Fourth, Carnegie
was not afraid to innovate, as the Hero Funds established in the United States and Europe to
recognize the self-sacrificial deeds of ordinary citizens exemplify. His scheme to provide
pensions for university and college teachers changed the face of higher education in the
United States by raising standards, as only those satisfying strict criteria could join, and by
creating the platform for a national higher education superannuation scheme (Wall, 1970:
826-834). Fifth, Carnegie consciously set out to make a difference in the long run by setting
up his trusts and foundations on a sustainable basis. To achieve this – as with the Carnegie
Corporation of New York – he resisted specifying mission and purpose in detail, preferring
instead to issue guidelines and then allow the trustees to shape policy flexibly according to
the dictates of the time (Wall, 1970: 883-884).
[Insert Table 1 Here]
Carnegie, capital accumulation and the field of power
16
The picture of Carnegie emerging from our analysis is of a committed entrepreneurial
philanthropist, an orchestrator and hyper-agent motivated by a passion for world making. His
words and deeds cannot be explained by altruism, which does not sit easily with his egoism
and love of power. What stands out more strongly is that philanthropy repaid him
handsomely in terms of cultural, social and symbolic capital, increasing, not diminishing, his
overall capital stock, and securing for him a position of influence as a multi-positional actor
within the field of power (Bourdieu, 1996). We elaborate this thesis below, proposing that
philanthropy should be viewed as part of his career-long drive to accumulate and exploit nonstandard forms of capital as a means of fortune building and world making (see Table 2).
[Insert Table 2 Here]
Accumulating cultural capital
Cultural capital may be assimilated without conscious effort through everyday interactions
with people and things within micro-environments; what Bourdieu (1990) calls habitus, the
invisible but powerful structuring structure that is formative of dispositions, preferences,
tastes and personal style (Anheier, Gerhards & Romo, 1995). Families especially imprint
themselves, and it is through families that cultural differentiation between social classes and
class fractions is perpetuated. Individuals emanating from the upper reaches of society,
Bourdieu observes (1991; 1996), come ready equipped with a social compass, enabling them
to act appropriately in a wide range of social situations. Their counterparts from less
privileged backgrounds, by contrast, if they are to be competitive, must compensate by
acquiring cultural capital more consciously through emulation, conversation, formal
instruction, reading, research and experimentation. In the case of Andrew Carnegie, he
acquired through habitus, as a member of a politically radical family, the disposition to
challenge the prevailing social order, campaign for change, and advocate social improvement
17
(Carnegie, 2006a:7-32). His family may have been materially poor, but in terms of cultural
capital his inheritance was not negligible. He was instilled with a fierce desire to learn, to
have and apply knowledge, and, while he may have had just a few years at school in
Dunfermline, he was an accomplished autodidact (Nasaw, 2006: 44-45, 60-61 & 90-92).
Carnegie’s writings on travel (1890, 1933), the United States (2005), industrial
relations (Wall, 1992), business and philanthropy (Carnegie, 2006b), and his own life
(2006a), confirm by their fluency, detailed observations, stories and robust argumentation
that he was a knowledgeable thinker with a talent for expressing himself succinctly. Far from
devoting all of his time to ‘money grubbing’, he made time throughout his career for reading
and cultural pursuits (Nasaw, 2006: 185-87). As a young man, he gained access to Colonel
Anderson’s library in Allegheny City, which fuelled a lifelong passion for the study of
history, politics, current affairs, literature and philosophy; writing in his autobiography that
he would not exchange his ‘taste for literature ... for all the millions that were ever amassed
by man’ (Carnegie, 2006a: 45). As his career blossomed, he spent long periods travelling and
observing other cultures and economic systems. His first long vacation in 1862 took him back
to Scotland and then onto London, where he visited the Art and Invention exhibition at the
Crystal Palace (Carnegie, 2006a: 99-102). In 1865, he made his first grand tour of Europe
absorbing himself in art and music (Carnegie, 2006a: 127-128). A succession of tours and
coaching holidays followed, traversing Britain, continental Europe, the Middle East and Asia,
which gave him a deeper appreciation and sensitivity towards culture, politics and business
(Carnegie, 1890; 1933). His learning enabled him to move freely in New York cultural and
political circles, being elected to the Nineteenth Century Club in 1883 where he debated with
university presidents and other public intellectuals (Nasaw, 2006: 207-220). Earlier, when
still resident in Pittsburgh, he had already begun to acquire through emulation the manners,
dress sense, tastes and sensibilities of an upper-class gentleman, affectionately describing in
18
his autobiography how Miss Wilkins, the daughter of Judge Wilkins, head of ‘the leading
family of Western Pennsylvania’, took him in hand and furnished him ‘with another means of
self improvement’, teaching him how to relax and enjoy ‘musical parties, charades, and
theatricals’ (Carnegie, 1920: 86-7). His later success as society host at his homes in New
York and Scotland, where he entertained prominent writers, musicians, academics,
politicians, lawyers, industrialists, financiers, and even the British monarch (Edward VII),
owed much to these lessons in charm, etiquette and storytelling (Nasaw, 2006: 303-306).
In the late 1870s and early 1880s, Carnegie’s library program attracted widespread
attention, bringing him into contact with politicians and opinion formers on both sides of the
Atlantic. In Britain, he identified with the Liberal Party intelligentsia, forming an enduring
friendship with John Morley, editor of the Fortnightly Review (1867-82) and later Secretary
of State for India (1905-11), and meeting and corresponding regularly with William
Gladstone, Prime Minister for four terms between 1868 and 1894 (Carnegie, 2006a: 266285). Inclusion in such circles opened up new vistas for Carnegie and brought him directly
into contact with Herbert Spencer, the guru of social Darwinism, whose ideas he assimilated
(Carnegie, 2006a: 286-292). He adopted Spencer’s evolutionary view of society as advancing
through competition and the survival of the fittest; there might be casualties along the way,
but government should resist intervening and let natural processes dictate outcomes
(Wiltshire, 1978). This was the philosophical foundation for Carnegie’s writings on a variety
of topics, including his pronouncements on how to succeed in business, organized labor and
the virtues of republicanism (Nasaw, 2006: 221-232). In his world, philanthropy and the
accumulation of cultural capital had merged seamlessly one into the other.
Accumulating social capital
19
Social capital exists when an actor within a network of social relations is willing to grant
another actor access to scarce resources under his or her control (Adler & Kwon, 2002). The
resources sought by an actor may be tangible or intangible, and include money, information,
introductions, opportunities and endorsements. Reciprocity is implied, but it is not a
necessary condition for the existence of social capital; and while social relations may be
stable and enduring, the willingness of one actor to favour another can never be guaranteed
(Burt, 1997). The value of social capital is thus contingent; the fortunes of an actor rising or
falling by current personal standing and network strength. Multi-positional actors like
Carnegie pursue a strategy of accumulating social capital within several social networks to
widen the pool of resources available to them and reduce exposure to network failure (Burt,
2000; Maclean, 2008). To accumulate social capital within any network, an actor must satisfy
the tacitly understood obligations of membership. Much depends on the capacity of the actor
to win favor, which requires the acquisition and application of relational skills (Baron &
Markman, 2003). Likewise, when breaking into or forming a new network, an actor cannot
progress without instilling belief and confidence in others (De Carolis, Litzky & Eddleston,
2009).
Laird (2006) has demonstrated that social capital formation has been integral to the
economic expansion of the Unites States from its inception. Her research pours cold water on
the myth of self-made men who, like Carnegie, are seen to triumph purely by dint of their
own personal resourcefulness. In Carnegie’s case, he is shown to have benefited in the early
days from family connections and rootedness in the Scottish immigrant community, which
secured opportunities ahead of others. Once employed in the office of Tom Scott, he
benefitted from having a mentor who was himself a rising star with a network of social
relations extending beyond the Pennsylvania Railroad. It was here that Carnegie learned to
exploit his charm and privileged position as Scott’s confidante to refine his relational skills
20
and gain entry to powerful business networks (Laird, 2006: 25-31). He emerged as a master
of ingratiation; lionizing his friends and associates in letters and conversations while making
plain what he expected of them. He was equally solicitous of business partners like Henry
Frick, industry leaders like Edgar Thomson, financiers like Junius Morgan, intellectuals like
Herbert Spencer, politicians like Theodore Roosevelt, and Heads of State like the German
Kaiser. In all cases, he applied the same recipe of flattery and high expectation (Nasaw,
2006). This technique, allied to a presumptuous, proactive approach to forging new contacts
and keeping others warm, made him a formidable networker. His proclivity for gift giving
and entertaining helped him hold together three distinct networks, each serving as a resource
to further his business and world-making ambitions (Wall, 1970). His inner circle consisted
of the family members and business partners who took daily care of his business interests in
Pittsburgh. Beyond this was the circle of business leaders at the pinnacle of US industry. His
wider circle consisted of a diversity of actors within the fields of power in the United States
and Britain, and included financial magnates, top politicians, media moguls, cultural leaders
and public intellectuals (Carnegie, 2006a: 172-177, 256-320).
Carnegie’s emergence as a powerful actor within the field of power, replete with
social capital, owed much to his philanthropy. After 1880, when his gifts of libraries to
Dunfermline and Braddock became common knowledge, his various philanthropic
endeavours were widely acclaimed (Nasaw, 2006: 207). The doors of high society and the
corridors of political power were now open to him. He became famous during the 1880s as a
writer and public intellectual through a series of articles in newspapers and magazines that
engaged with topical issues of the day, notably tariffs, big business and the formation of
trusts, and trade unions (Wall, 1992). His philanthropic activities lent him distinction as an
individual who prized community and the welfare of others, enabling him to speak with
seeming objectivity, appreciating all sides of a question; no more so than with respect to the
21
labor unrest then rumbling across America. In 1886, he published in Forum magazine ‘An
Employer’s View of the Labor Question’ and ‘Results of the Labor Struggle’, in which he
emphasized the common interests of capital and labor (Wall, 1992). The solution to wage
disputes was not to ban unions but the adoption of sliding scales for wages, rising and falling
in line with the prices of finished products. If strikes did occur, employers should be patient
and close their premises rather than employing strike breakers because ‘there is an unwritten
law amongst the best workmen: thou shalt not take thy neighbour’s job’ (Wall, 1992: 102-3).
Remarkably, for a time, before the bitter strike at his Homestead works in 1892, Carnegie
commanded the respect of both the labor movement and the political establishment. He began
to move in high circles within the Republican Party, holidaying in Britain with presidential
candidate James Blaine, and becoming acquainted with a succession of Presidents, including
Benjamin Harrison, William McKinley and Theodore Roosevelt (Carnegie, 2006a: 293-314;
Nasaw, 2006: 327-324, 511-523). His position was consolidated by the publication of the
Gospel of Wealth, showing how inequalities in the distribution of wealth might through
philanthropy be turned to advantage (Carnegie, 2006b), and by systematically drawing in
leading members of the elite like John Hay and Elihu Root as board members for his trusts
and foundations (Nasaw, 2006: 593-682).
Accumulating symbolic capital
In any field of human endeavour, individuals who win the right to rule are those possessing
the highest levels of symbolic capital, the formal and informal signifiers of legitimacy and
distinction that mark out actors active within the field of power (Bourdieu, 1986a; 1986b;
1996). Formal signifiers include educational qualifications, prized memberships, elevated job
titles, and honours conferred by universities and governments. Informal signifiers, potentially
more powerful but harder won, include public recognition, celebrity, identification with
22
virtue, and lionization (Maclean, Harvey & Press, 2006: 23-49). Those with the right amount
and blend of symbolic capital are by popular consent deemed fit to hold high office. They are
trusted, their ideas respected, and their leadership accepted. They may not be universally
liked or approved of, but they are perceived as credible and engender belief. The most
successful actors recognize the importance of symbolic capital accumulation early in their
careers. They gain qualifications and seek promotions and practical experience. They engage
in image building and recognize the value of personal myth-making; stories which, though
loosely grounded in fact, reveal to the world a desirable quality or capability. Recognition
and reputation are further enhanced through symbolic association as supporters of powerful
actors already active in the field of power. Inclusion on the periphery of elevated circles
provides further opportunities to shine by gaining prized memberships and establishing voice
through speaking, writing and the exercise of leadership. On moving from peripheral to
central positions within the field of power their ideas gain intellectual currency, and they
begin to collect the honours that speak of distinction.
The relentless rise in power and influence of Andrew Carnegie from the 1850s to the
1910s was both a consequence and cause of his capacity to accumulate symbolic capital.
There are five constants revealed over seven decades. First, Carnegie was a master of
symbolic association. He identified himself as supporter, friend and associate with many
leading businessmen, intellectuals and politicians of his age, cherishing the role early in his
career as ‘Scott’s Andy’ just as later he was happy to be known as a disciple of Herbert
Spencer (Carnegie, 2006a: 68, 291). The patriotism evident in his writing, especially his
bestseller Triumphant Democracy (1886), likewise positions him as a champion of the
establishment, however seemingly radical his language and proposals. Second, he insisted on
being heard, on putting forth his arguments. As a teenager he used his rhetorical skills to
campaign for access to Colonel Anderson’s library, and thereafter he spent a large part of his
23
time communicating through books, journal contributions, newspaper articles, letters to
opinion formers, and public speeches, delivered in a direct, persuasive style. He considered
his influence to grow ‘more than anything else’ from this ability (Nasaw, 2006: 187).
Carnegie, in short, knew how to use ‘propaganda’ to further his cause. Third, he was expert in
propagating myths that marked him out ahead of his rivals. In his autobiography, he describes
how in a crisis situation he audaciously took over the scheduling of trains on the
Pennsylvania railroad without authority, signing orders in the name of Scott. All worked out
well and the legend of the talented ‘little Scots devil’ was born, communicated upward by his
amused boss (Carnegie, 2006a: 66-67). Later, as we have seen, he propagated the myth of
Carnegie, champion of the working man (Carnegie, 206: 208-220; Wall, 1992), and Carnegie
supreme dealmaker, one of few to get the better of J.D. Rockefeller (Chernow, 1998: 366368). Fourth, he was never afraid to inflict symbolic violence (Bourdieu, 1990) to assert his
independence and authority. As Tedlow observes, his eventual break with Scott following his
withdrawal of support for the Texas and Pacific Railroad, was as much a public statement of
independence as it was a rational business decision (Tedlow, 2003). More generally, the
alacrity with which he censured or sacked senior managers, even partners, who deviated from
policy or instruction attests to his readiness to use fear as an instrument of control (Nasaw,
2006: 567-572). Fifth, Carnegie understood the power of the press and went to great lengths
to cultivate good relations; providing stories, offering comments on unfolding events, and
making headlines with controversial proposals, as in 1908 when he caused a sensation by
advocating removal of the protective tariff on imported steel (Nasaw, 2006: 702-704).
Philanthropy was Carnegie’s trump card in his campaign to accumulate symbolic
capital. In terms of symbolic association, the scale of his giving set him apart and gave him
access to elite actors denied to others. Few entrepreneurs have enjoyed the opportunity to
lecture elevated political leaders on pressing topics – for example, Gladstone on political
24
organization, McKinley on imperialism, and Roosevelt on international peace – as Carnegie
did (Carnegie, 2006a: 274-314). Fewer still have had public tributes paid to them like
Gladstone’s review and recommendation of The Gospel of Wealth (1890) in Nineteenth
Century. In terms of voice, the appeal of his writings on philanthropy made him the public
face and spokesperson for the wealthy of America, establishing a creed and setting an
example that others like Rockefeller later followed (Chernow, 1998: 313-314). In terms of
myth-making, his pledge to distribute almost all his fortune in his own lifetime gave him the
ultimate distinction of originality; all followers being, to use Bishop and Green’s phrase
(2008), ‘Carnegie’s children.’ In terms of symbolic violence, his readiness to say no to the
countless appeals for charitable donations received on a daily basis, like Gladstone’s request
for funds for the Bodleian library (Nasaw, 2006: 538), proclaimed his independence and
spoke of his integrity. Finally, in terms of media manipulation, philanthropy provided a stage
for public pronouncements, which he used to great effect in the aftermath of Homestead to
restore his reputation; the speech he delivered in 1895 at the opening of his cultural complex
in Pittsburgh made headline news, Congressman Dalzell eulogizing that ‘there are
unnumbered hearts here and elsewhere ... that beat to the measure of God Bless Andrew
Carnegie, and hearts shall continue thus to beat through generations yet unborn’ (Nasaw,
2006: 503).
Business, philanthropy and the field of power
Elite actors within the field of power strive for enforceable agreement on matters of policy,
law and resourcing within specific jurisdictions. Agreements assume legitimacy when public
and elite opinion are aligned. When they are not, the potential exists for civil unrest (Smith,
2000). The stakes are high and contests between different coalitions within the elite over
policies, laws and resources are common (Bourdieu, 1996; Maclean, 2008). Politicians, given
25
their on-going need for electoral approval, are especially sensitive to public opinion, and the
coalitions they join must strive for approbation (Domhoff, 1979). Thus the elite, while
collectively dominant, is not immutable. The contests that take place require actors from
different backgrounds to make common cause on an issue-by-issue basis (Clegg, Courpasson
& Philips, 2006). It would be mistaken to think of the field of power as a set of factions or
hard-wired networks. There may be established cliques, but this does not imply permanence,
as fluidity is necessary for stability within power-laden social processes (Baumgartner et al.,
2009). The most dominant actors have the resources needed to form and lead issue-based
coalitions (Zald & Lounsbury, 2010). They have ready access to the elite meeting places
where members debate issues and form coalitions, and have the resources needed to launch
and sustain lengthy campaigns for public support and government action (Giddens, 1984).
Andrew Carnegie, in possession of extensive cultural, social and symbolic capital, had
the power and authority needed to serve as ‘play-maker’ in the business of world making. As
entrepreneur, Carnegie’s greatest achievement was to mastermind the growth of his steel
company from industry minnow to industrial mastery. On the ground, this required relentless
pursuit of cost savings, quality improvements and increased production through the
reinvestment of profits in superior plant and equipment (Livesay, 1977; Misa, 1995). Equally,
it required Carnegie, from his base in New York, to assume a leading role in managing in the
industrial landscape. His writings on industrial relations, trusts, and tariffs were interventions
in a series of related but distinct contests to influence public opinion during the 1880s and
1890s (Hendrick, 1933; Wall, 1992). The unifying theme of the opposition to big business
supported by the Democratic Party was that monopolistic practices and tariffs on foreign
imports had kept prices high to the detriment of consumers, lining the pockets of Robber
Baron industrialists like Carnegie (Nasaw, 2006: 481-484). It was true that the steel industry
had been sheltered from competition, and that the most efficient firms had earned super-
26
normal profits in consequence (Misa, 1995), but Carnegie countered that tariffs had enabled
the industry to establish itself with enormous benefits for employment and economic
development (Hendrick, 1933: I-306-350). This was the pro-tariffs line taken by the
Republican Party and its steel industry supporters, who lobbied fiercely against radical
revision of existing schedules. Carnegie, a Republican supporter but also intensely pragmatic
and aware of public opinion, spent a good deal of time in Washington promoting the view
that as the steel industry grew in strength modest revisions to tariffs might be desirable; an
argument that prevailed following the bitter election of 1888 which saw Republican
Benjamin Harrison elected President, and continued to hold sway even after Democrat
Grover Cleveland was returned to office in 1892 (Nasaw, 2006: 375-377). Carnegie rode the
political waves, setting the tone through his writings, speeches and newspaper comments, and
cultivating personal relations with Washington powerbrokers like Blaine, who served as
Secretary of State under Harrison, Benjamin Tracy, Navy Secretary, and Commander Folger,
adviser to Tracy, who holidayed with Carnegie in Scotland. It is through this network that
Carnegie won lucrative government contracts for the supply of nickel-steel battle armour
(Nasaw, 2006: 3378-384). In this and in many other ways – buying land at favourable prices,
avoiding competition, breaking strikes and negotiating takeover deals, for example – he
benefited financially from his centrality as a capital-rich actor within the field of power.
As philanthropist, Carnegie sought to extend his world-making reach beyond business
to encompass society-at-large. This was a natural development. From his earliest days at the
Pennsylvania Railroad he had worked with men like Scott and Thomson who in business
looked beyond the now, to the future, to imagine a nation changed in part through their own
endeavours. From them Carnegie assimilated the same transformational cast of mind, which
became more pronounced as success followed success. As his familiarity with the workings
of the field of power increased, and as the capital at his disposal grew ever larger, he found
27
other powerful actors willing to join forces with him to realize seemingly audacious goals.
The satisfactions were immense, and he never tired of the acclaim that came with world
making; collecting awards and tributes across the United States, Britain and continental
Europe (Wall, 1970: 870-898). Regular triumphs and immense resources made Carnegie bold
to the point that he was willing to invest heavily in the cause of international peace and
arbitration. In this, the great cause of his retirement years, he drew heavily on his social and
symbolic capital in attempting to position the United States as champion of arbitration in
resolving international disputes (Carnegie, 2006: 243-246; Nasaw, 2006: 649). He had
unrivalled access to President Roosevelt and his Secretaries of State, John Hay and Elihu
Root. On the other side of the Atlantic, after the Liberal Party came to government in 1905,
he was on familiar terms with many Cabinet members, including Prime Minister CampbellBannerman (Carnegie, 2006: 315-319; Nasaw, 2006: 678-682). In the build-up to The Hague
peace conference in 1907, he was engaged in shuttle diplomacy, trying to align the positions
of the United States and British governments, and as President of the National Arbitration
Conference he hosted a peace conference in New York with official representatives from
each of the European Great Powers (Nasaw, 2006: 684-689). Little of real substance came of
Carnegie’s efforts, but the seeds of future developments were sown, and The Hague Peace
Palace, which he funded, remains a memorial to his commitment.
Discussion and conclusion
The main findings of this article, established theoretically and confirmed empirically, are
fourfold. First, entrepreneurial philanthropy is animated by the world-making ambitions of
entrepreneurs; individuals who having achieved big things within business now seek to
extend their reach into the realm of the social as means of personal aggrandizement.
Entrepreneurial philanthropists rarely abandon business in favour of philanthropy, often
28
engaging in both contemporaneously, at least until the final stage of their careers. In their
everyday routines and practices, business and philanthropy merge naturally. Second,
entrepreneurial philanthropy is not a one-way street. Entrepreneurial philanthropists invest in
the future and their investments yield returns directly in cultural, social and symbolic capital,
which indirectly might yield significant economic returns. Philanthropy serves as a
mechanism both for capital conversion and capital accumulation. Third, entrepreneurs bring
to philanthropy the mental models, strategies, tactics, routines and practices learned through
creating and building a successful business. This explains the emphasis given to scale,
efficiency, sustainability, focus, capabilities, governance and accountability. It also explains
the awareness shown by entrepreneurial philanthropists of potential synergies and the
interrelatedness of people, processes and activities. Fourth, the standing and influence within
the field of power of entrepreneurs who become philanthropists is greatly enhanced. The cash
invested in philanthropy boosts their stocks of cultural, social and symbolic capital, enabling
them more easily to form and lead issue-based coalitions, and to engage confidently in the
dialectical, instrumental and legislative processes that win elite and public support for big
projects, business and philanthropic.
We make a singular contribution to the entrepreneurship literature in the capital
theoretic model of entrepreneurial philanthropy presented in Figure 2. Building upon
Bourdieu’s typology of capital (Bourdieu, 1986b; Harvey & Maclean, 2008), this
demonstrates the symbiotic relationship between entrepreneurship and philanthropy, and
highlights the role of philanthropy in the processes of capital conversion and accumulation.
Our empirical study confirms the importance of each of the four main forms of capital
identified by Bourdieu, and the complex interplay that exists between them when deployed
within the field of power by dominant actors like Carnegie. The implications are significant.
The focus in much of the entrepreneurship and related literatures on non-standard forms of
29
capital has been on the definition, measurement and exploitation of social capital, reflecting
the long-standing interest of social scientists in network theory, and effectively relegating
cultural and symbolic capital to lesser roles within the theoretical domain. Our study, by
contrast, affirms the greater realism inherent in Bourdieu’s original approach, and suggests
there is more to gain analytically by taking a unified rather than piecemeal approach to
capital theory. Cultural and symbolic capital warrant serious study. In Carnegie’s case, for
example, we have seen how his intellectual currency was partly the product of his intimacy
with intellectuals like Spencer, Morley and Arnold, and in turn how this was an important
source of legitimacy and personal distinction. We do not propose that the four forms of
capital identified by Bourdieu are practically indivisible, but we do suggest that accumulation
and exploitation should be treated as interconnected processes involving all four types of
capital. Our study further points to the importance of specific micro-practices to
understanding the acquisition and development of capital accumulative entrepreneurial
capabilities. Entrepreneurs like Carnegie, alive to opportunities, develop through habitus and
experience a reflexive sense of how to react appropriately in the moment, joining things
together in ways that others cannot see. They may make mistakes, but their tried-and-tested
routines and familiar practices enable them to act with confidence to build momentum and
acquire fresh cultural, social and symbolic capital. Critics of Carnegie have long held that it
was not he but his partners, who worked harder and had greater technical knowledge, who
made his fortune; while he spent much of his time at leisure in New York and Scotland
(Nasaw, 2006: 643-645). What they have failed to see, of course, is that he understood the
bigger picture, knew how to accumulate cultural, social and symbolic capital, and was at
work even when seemingly at play.
Carnegie’s pervasive influence within the field of entrepreneurial philanthropy stems
more than anything from his authorship of the Gospel of Wealth. The harvesting of economic
30
rents on a massive scale by entrepreneurs who retain ownership of industry-dominant firms,
and the associated consequences for the distribution of income and wealth, have long
inflamed public opinion, periodically provoking sections within ruling elites to break ranks
and attempt corrective action, through taxation or legislation to curb monopoly power. In
these circumstances, the right to possess great wealth becomes a contested issue, painful for
wealth holders ‘on trial’ in the court of public opinion or, worse, actually ending up in the
dock. As so-called ‘Robber Barons’, Carnegie was branded a hypocrite; Rockefeller saw
Standard Oil broken up; and Andrew Mellon, after serving as United States Treasury
Secretary, was put on trial for tax evasion (Cannadine, 2008: 505-541). More recently, the
pursuit of anti-trust cases against Microsoft in the United States (1998-2002) and Europe
(2003-2007) is a reminder of the power of governments, backed by public opinion, to
sanction even the most dominant global corporations. Carnegie and Rockefeller in particular
were stung by the Robber Baron critique and feared its consequences (Chernow, 1998: 487501; Nasaw, 2006: 346-351). The Gospel of Wealth, which Carnegie composed and
Rockefeller embraced, offered a dignified solution. By voluntarily ‘giving back’ to
communities, entrepreneurs might demonstrate that inequality was a temporary phenomenon
which, through wise spending, could deliver public benefit. In exchange for their
munificence, entrepreneurs turned philanthropists would gain the right to engage in world
making on a grand scale. Carnegie’s tract, substantiated by his own example and that of
Rockefeller, was embraced by the ruling elite and, with media approval, helped persuade the
masses in the United States and beyond to tolerate on-going inequalities. The fact that many
of today’s leading philanthropists – including Gates, Buffet and Feeney – attest to the impact
of the Gospel on their own thinking and practices, regarding the book as ‘practically holy
scripture’ (Bishop & Green, 2008: 13), confirms the continuing appeal of the logic of
entrepreneurial philanthropy championed by Carnegie. This said, it is important not to
31
exaggerate Carnegie’s influence in his own lifetime or subsequently. Ultimately, the logic of
entrepreneurial philanthropy derives not from ethics but from the consequences of capitalism
and globalization. Gates and Buffet, like Rockefeller and Mellon, are intellectually gifted,
capable, when confronted by their own situation and attendant external pressures, of
independently concluding that ‘the problem of our age is the proper administration of wealth,
so that the ties of brotherhood may still bind together the rich and poor in harmonious
relationship’ (Carnegie, 2006b: 1). Likewise, it is natural, with or without reading Carnegie,
that they should apply business methods within philanthropy, pursue capital accumulative
strategies, lead issue-based coalitions, and seek public support for world-making projects
(Clegg, Courpasson & Philips, 2006; Creed, Scully & Austin, 2002; Maclean, Harvey &
Chia, 2010; Zald & Lounsbury, 2010).
The theoretical ideas presented in this article cannot be tested fully through analysis
of a single case, however rich or seminal. More extensive research on the quantitative
dimensions of wealth creation and philanthropy is needed before we have the true measure of
contemporary entrepreneurial philanthropy and its potentialities. The statistics published in
rich lists and giving lists are of doubtful reliability, regularly exaggerating the extent of actual
giving by confusing pledges with real transfers of wealth, and in any case offer only partial
coverage. Until we have better data, we cannot know the real size or extent of the
entrepreneurial philanthropy movement, and the suspicion must remain that the proportion of
fortunes actually put to work philanthropically, both individually and collectively, falls far
short of the Carnegie ideal. Are the likes of Gates, Buffet, Allen and Omidyar in effect
providing a fig leaf behind which the majority of the super wealthy across the globe stands
exposed? Answering this question will enable researchers to move beyond the idealistic,
celebratory accounts of entrepreneurial philanthropy currently in circulation to explore more
systematically the questions to which this article has suggested provisional answers.
32
33
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Figure 1: Forms of Entrepreneurial Capital and the Accumulation Process
ECONOMIC CAPITAL
CULTURAL CAPITAL
Financial Assets, IPR, Tangible
and Intangible Business Assets
Personal Dispositions, Knowledge,
Know-How, Skills and Capabilities
SYMBOLIC CAPITAL
SOCIAL CAPITAL
Reputation, Qualifications,
Connections, Networks,
Honors, Distinctions and Associations
Alliances and Relationships
Figure 2: A Capital Theoretic Model of Entrepreneurial Philanthropy
Economic Capital
Symbolic
Capital
Cultural
Capital
Philanthropy
43
Social
Capital
Table 1: Andrew Carnegie’s Philanthropic Projects*
Project
Year
Initiated
Philanthropic Purpose
Amount
Invested
($ Millions)
Carnegie Corporation of New York
1911
Support for higher education, libraries,
research and other Carnegie foundations
125.000
Libraries
1879
Provision of public libraries (2,811)
60.365
Carnegie Foundation for the
Advancement of Teaching
1905
Pensions for teachers in higher education
29.250
Carnegie Institution of Washington
1902
Support for scientific research
22.300
Colleges
1895
Support for buildings and endowments of
universities and colleges (500+)
20.363
Carnegie Institute of Technology
(Carnegie Mellon University)
1900
Provision of applied technological
education
13.531
Carnegie Institute of Pittsburgh
1890
Promotion of learning, scientific
knowledge and cultural activities
13.188
Carnegie Hero Fund Commission
and other hero funds
1904
Honour and reward citizens who risk
their lives to save others in the United
States and Europe
10.540
Carnegie Trust for the Universities of
Scotland
1901
Support for Scottish universities and
students
10.000
Carnegie Endowment for
International Peace
1910
Advancement of understanding between
nations to promote peace
10.000
Carnegie United Kingdom Trust
1913
Support for educational and social
welfare provision in UK
10.000
Church organs
1873
Provision of church organs (7,689)
6.248
Benefactions
1890
Support for endowment funds and
charities
5.210
Carnegie steel workers’ pensions
1901
Pensions for former employees
4.000
Carnegie Dunfermline Trust
1903
Provision of public park and amenities
3.750
Church Peace Union
1914
Promotion of international peace and
goodwill
2.025
Public buildings
1904
Headquarters for organizations
promoting engineering and international
cooperation
1.550
Hague Peace Palace
1903
Resolution of international disputes
1.500
Steel town institutes
1901
Promotion of learning and cultural
activities
1.000
Simplified Spelling Board
1906
Promotion of simplified spellings of
common words
0.280
*Table based upon North, S.N. Ed. (1919). A Manual of the Public Benefactions of Andrew Carnegie,
Washington: Carnegie Endowment for International Peace. The total expenditure of $350.1 million, inflated by
the United States consumer price index with 1901 (the year Carnegie cashed in his fortune) as base year, equates
to $9.12 billion in 2009 prices: Officer, L.H. and Williamson, S.H. ‘Purchasing Power of Money in the United
States from 1774 to 2010’, MeasuringWorth, 2009. URL http://www.measuringworth.com/ppowerus/
44
Table 2: Carnegie’s Investments in Cultural, Social and Symbolic Capital
Form of Capital
Methods of Accumulation
Cultural
Reading and research
Grand tours
Involvement in intellectual,
cultural and political circles
Philanthropy
Social
Flattery and ingratiation
Entertaining and gift giving
Cultivation of friendships,
associations and cliques within
the field of power
Philanthropy
Image building through writing,
public speaking and media
relations
Myth making
Demonstrating power and
authority
Philanthropy
Symbolic
45
Ways of Exploiting
Seeing the bigger picture –
opportunity recognition, strategy
and tactics
Acceptance within the field of
power
Winning important arguments
Legitimizing ruthless actions
Inclusion and favours
Reciprocity and mutuality
Alliance building, power broking
and deal making
Extending social networks
Holding sway over public and
political opinions and sentiments
Attracting support, opportunities
and approbation
Strengthening hand in negotiations
Demonstrating worthiness,
distinction and virtue